Q2 2021 Netstreit Corp Earnings Call
Greetings and welcome to the net Street Corp, second quarter 'twenty 'twenty.
'twenty 1 earnings call.
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Amy.
And thank you Amy you may begin.
And thank you for joining us for the second.
Second quarter, 2021 and earnings Conference call and addition to the press release distributed yesterday after market close and.
Posted a supplemental package and an updated investor presentation, which can be found and the investor relations.
Section of the company's website at Www Dot net street Dot com on today's call management's remarks, and answers to your questions may contain forward looking statements as defined in the private Securities Litigation Reform Act of 1095 forward looking statements address matters that are subject of risks and uncertainties that may cause actual results.
And to differ from those discussed today for more information about these risk factors. We encourage you to review our form 10-K for the year ended December 31, 2020, and other SEC filings. All forward looking statements are made as of the date hereof and net street assumes no obligation to update any forward looking statements and the future in.
Certain financial information presented on this call includes non-GAAP financial measures. Please refer to our earnings release and supplemental package for definition GAAP.
And the conciliation and and explanation of why we believe such non-GAAP financial measures are useful to investors.
Today's conference call is hosted by net streets Chief.
In addition of officer, Mark Manheimer, and Chief Financial Officer, Andy Blocher, They will make some prepared remarks, and then we will open the call for your questions.
Now I will turn the call over to Mark.
Good morning, everyone and thank you for joining us today for the Street's second quarter 2021 earnings Conference call.
I won't begin.
And with a review of our investment activity and portfolio of metrics for the quarter and Andy will then provide detail on our second quarter results and our balance sheet.
The begin our core focus is on strategic growth with high quality tenants.
And pursuing opportunities, where we see the best risk adjusted returns.
We continue to target tenants, who.
And as physical locations are critical to their cash flow generation, making them more resistant to ecommerce and competitive pressures.
More importantly, we focus on tenants with strong balance sheets and proven access to capital.
During the quarter, we achieved the acquisition and development volume totaling approximately $121 million.
And our largest quarterly volume since our IPO last August.
We completed and approximately $117 million of acquisitions at an initial cash capitalization rate of 6.5% inclusive of all closing costs and a weighted average remaining lease term of 9.7 years.
Over 93% of our second.
Quarter acquisitions were with investment grade rated tenants, where tenants with investment grade profile.
Also in the quarter, we provided $4 million of development funding, which included 2 new projects with total cost expected to be $6 million.
Both of these developments are with tenants with investment grade profiles.
We anticipate that we will.
And we'd like to rent from these projects by second quarter of 2022.
And finally in the quarter, we sold 5 of assets for $13 million at a weighted average cash capitalization rate of $6.7 per cent for.
These dispositions we've decreased our casual dining exposure from 1.9% to 1.2% we.
We will continue to look.
And begin to communities to decrease our exposure to industries that are more at risk from retail disruptions from the technological advances we're shifting consumer behavior.
Moreover, we will continue to look at dispositions as a portfolio management tool for recycled capital into better long term opportunities.
Moving on to the to our portfolio metrics.
Orix as of June 32021, our portfolio contains 267 leases comprised of $5.2 million square feet and 39 states with a diversified tenant roster of 59 tenants and 23 industries.
Total ABR of our primary earnings driver increased to $55.3 million, where the weighted average lease.
And for operating 9.9 years.
At quarter, and we were 100% occupied with no lease expirations until 2023 and less than 1% of ABR expiring before 2025.
Based on ABR of Howard tendency of 70% of investment grade with an additional 13, 5% classified as investment grade profile.
Is.
But the bulk of our tenant credit quality and our defensive and the divest of nature of our of the portfolio. We are proud to report, 100% rent collections for 11 straight months and through July.
Our pipeline continues to grow in size and we are excited about our ability to execute on our external growth strategy.
We continue to review a wide range of opportunities.
As a result, bleeding investments and stabilized assets.
And and extend opportunities sale leaseback transactions and the development projects.
And we'll stay true to where it's just our strategic focus on investment grade and other high quality tenants, while we continue to enhance the overall diversification of our portfolio.
As we look to the balance of the year and beyond.
We are truly excited by the opportunity ahead of US our portfolio continues to perform well and our acquisition processes and our proactive and prudent.
We continue to target at least $360 million and net acquisitions for the full year 2021.
Courted by our strong balance sheet and liquidity that was bolstered last quarter with our transformational.
All of $203.6 million of follow on equity offering.
Before I turn the call over to Andy I want to provide some perspective on the streets accomplishments since we went public just under a year ago.
And we grew our asset base from 163 properties the 267 and.
Investment grade assets grew from 64% of our portfolio to 70%.
And investment grade profile of tenants that metric grew from 72% to over 83%.
As a result of our our ABR has increased from $34.5 million to $55.3 million, while improving the already strong quality of our portfolio.
I couldn't be prouder of the team we have in place that has been.
Integral and achieving these accomplishments and we remain focused on these same the key drivers, which I believe will further advanced in the streets platform and create significant value for our shareholders.
I'll now turn the call over to Andy to discuss the balance sheet and our capital markets activities Andy.
Thanks, Mark and once again, thank you all for your time with us this.
And let me begin with our results for the second quarter of 2021.
Yesterday, our press release, we reported the net loss of 7 and subs.
And if that's all of the 18th.
And the <unk> 20 per diluted share for the second quarter.
I wanted to note that these per share results reflect the impact of the equity offering completed in April.
And while we set of post IPO of record for investment volume and the second quarter, those acquisitions or on our balance sheet for an average of only 19 days in the quarter.
In April we issued $10.9 million shares of common stock and our first of all 1 offering raising $203.6 million and proceeds including.
The size and for all of the underwriter's option to purchase additional shares.
Proceeds from the offering were used to pay off the $13 million outstanding balance on the credit facility and fund investments and the quarter with the remainder being held as our $88 million cash balance as of quarter and.
We believe this offering was the key.
And the extra debt Street as we continue to demonstrate our business strategy.
Moving onto our balance sheet as of June 30th we did we had $88 million and cash and our $250 million revolving line of credit was fully undrawn.
We have no debt maturities until the maturity of our revolver and December.
Key steps, 1 and 3 which are subject to a 1 year extension option, which would match. The December 2020 for maturity of our $175 million term loan.
Our net debt to annualized adjusted EBITDA ratio was 2.1 times at quarter and well below our 4.5 to 5 and a half time long term target.
And finally with.
And for 20 of the balance sheet and early September we will be eligible to file a new universal shelf, which among other things would provide greater options and efficiency for future capital raising.
With respect to dividends and early this week the board declared of 'twenty regular quarterly cash dividend to be payable on September 15th.
The respect to shareholders of record as of September <unk>, reflecting an annualized dividend rate of <unk> 80 per share.
And as previously disclosed we are maintaining full year 2021 F O guidance and the range of 95 to 99 per share.
We expect to complete at least $360 million of net acquisitions.
<unk> this year up from our original guidance of $320 million. We continue to see this is back end weighted and each quarter and the cap rates consistent with our recent activity.
For our cash G&A, we continue to expect to be and the range of $11 million to $12 million.
While the firewall and offering was the significant positive.
Physician at St are of larger market capitalization and will require us to report as of <unk> large accelerated filer beginning in 2022.
Our team is well prepared to handle the change and are already working to enhance our strong control of environment to ensure compliance from of Sox perspective.
The result of that impact is to pull forward.
And for incremental internal control expense, which when coupled with additional travel expenses associated with business development and diligence as a greater number of our employees and their venturing out of Dallas. It makes the more likely for us to be on the higher rather than the lower end of our 2021 G&A guidance range.
In addition, our cash G&A.
So and concludes the recurring transaction costs, which are listed here and our financial statement as a separate line items.
Noncash compensation expense will be and the range of $3 million to $4 million and.
And we expect our cash interest expense, including unused line of credit fees of 3 to $3.5 million and and an additional 600000.
Dollars of noncash deferred financing fee amortization.
We expect to incur of taxes in the range of 200, the $300000 and lastly, we expect fully diluted weighted average shares outstanding to be in the range of 38 to 39 million shares for the year.
To wrap up we're.
Very pleased with our strong second quarter activity building off the momentum and for the first quarter.
We're well positioned with ample capital and the strong pipeline of opportunities for accretive investments.
As always we want to acknowledge our entire team for their hard work and contributions to our strong performance. So far this year.
This concludes our prepared.
We're very remarks, well now open the line for your questions operator.
Thank you and if you would like to ask a question. Please press star 1 on your telephone keypad. The confirmation tone will indicate that your line is and the question queue and you May Press Star 2 if you would like to remove your question from the queue for participants using speaker equipment and may be necessary to.
Repair and your handset before pressing the star of keys, 1 moment, please while we poll for questions.
Thank you. Our first question comes from Nate Crossett with <unk>. Please proceed with your question.
Hey, good morning, guys.
The pick up your debt and congrats on the strong corridor.
I was hoping you could maybe comment on the activity so far and 3 Q.
You know, what's the size of the pipeline right now and.
And maybe if you could just touch on competition and pricing.
And so now it sounds like you're expecting the yield to be close to what you did this quarter, but any color you can give would be helpful.
Yeah sure. Thanks, Nate Yeah.
Yeah, I mean, you know I think you know having been public Virginia, just about a year now and starting to do a little bit more repeat business and whether it would be on the development.
The side or blend and extends and and some sellers that you know we've had a pretty good experience with it. So we are seeing a little bit more on the on the repeat business side, which I think is really.
And helping the pipeline and again and you know as we've discussed and the path.
We'd like to use our size and it has an advantage.
And really kind of lay out.
And he said and pick off the assets, where you know where were getting and yeah, we think better than market pricing.
And the other more inefficiently priced assets and you know the repeat business is really where we see more and more of that so you know we've been able to continue to achieve the same cap rates I think you know this this quarter and the cap rate was the same as our first quarter as a public company.
Our operating and you know pretty pleased with the you know and being able to continue to generate.
And similar types of returns are you know of.
Quarter in and quarter out of that being said you know there is a lot of competition for for the types of assets that were that were looking for.
And I you know certainly in the high quality investment grade side, they're easier to finance.
But.
And I think you know using our relationships of the way that we have and really.
Building out a larger pipeline quarter and and quarter out has the has allowed us to the continued to get you know similar types of cap rates and you know we expect the same here and the future.
Okay. That's helpful. Thanks.
I noticed that the 711.
So we've concentration went up and I think that was 1 that you were selling.
Selling them before so I'm just curious.
And obviously is of great credit, but if you could give a little color on on that that might be output as well.
Yeah sure Yeah, I mean, and that's the right I think as we scale of the business and the and the asset base gets you know.
Yeah, a little bit larger you know maybe more than $2 billion are you know, we think that we should be able to get all the tenant concentrations below 5 per cent and that's kind of more of a a long term goal but.
But we also don't want to.
Turn away, yeah, great acquisitions, and and we have the opportunity to do with sale leaseback and California, Oh with 7.
11, wherever he got new of brand new 15 year absolute net leases are pretty attractive pricing with attractive bumps.
And so we kind of looked at that as additive to the quality of the portfolio. So we.
We will look to a decrease of exposure, mostly through increasing the size of the portfolio over time.
But we also don't think it's likely that we're going to have going to have many more opportunities.
711 of the pricing that we achieved.
Okay. That's helpful. Thank you guys.
Thanks, Matt.
Thank you. Our next question comes from Todd Thomas with Keybanc Capital markets. Please proceed with your question.
Hi, Thanks, Good morning first.
Question, just wanted to follow up on investments and you know as we as we think about the ear winding down 2022, I realize you're not giving guidance, but you know the company's installed bases is increasing and I'm. Just wondering more broadly how we should think about external growth going forward, whether the strategy is to acquire and growth.
With the you know sort of a certain percentage of the base each year or would you expect to keep the pace of constant just curious if you could comment on investment activity for the company and more broadly you know as we move forward.
Yeah sure I mean, and you know I think in general I wouldn't expect to see US drastically ramp are you know acquisitions I think over.
And by you know will steadily increase our of our acquisitions and some of them. Most of that is going to come from our opportunity set and I think you'll like.
And like I mentioned at the top with a repeat business and increasing the you know those are opportunities, where we're seeing outsized pricing and inefficiently priced assets, we'd like the kind of continue.
Well the was that similar path, but understanding as we grow the asset base of the acquisition's appetite is going to need to increase but really at our size you know call of $1 billion or so of assets.
Adding $90 million net of dispositions for the quarter really does allow us to you know to grow a of a vote of at a pretty favorable clip as compared.
2 of our for yourself.
Okay, and then you know.
For for the balance of the year. So you maintained guidance of at least $360 million.
You're running a little bit ahead of of that piece of it seems.
I'm just curious are you know with some potential tax policy changes late in the year.
Otherwise and sort of in light of the improvement and the company's cost of capital. The you know is there are you know potential the to see you know sort of a much larger.
A larger.
The pace of out of acquisitions and investments late in the year, you know heading into 'twenty 2.
Yeah, I mean, we're really going to I think just stick to our knitting and stick to what's been working for US you know I think getting the pricing that we have it is really important you know the only thing more important that the us at this point is the quality of the assets that we've been able to to put into the portfolio.
And you know again I think we will continue to increase.
The acquisitions on the margin over time, as we increase our opportunity set but we don't want to get too far over our skis and and start really ramping growth just for the sake of just for the sake of growth and because we can just be kept and because we can doesn't necessarily mean that we should so I think we're pretty comfortable with the approach that we've been taking over the last several quarters.
Alright, and then Andy you mentioned.
You talked about leverage and the balance sheet and.
And your prepared remarks, and I'm just curious you know the ATM language was removed from the guidance no change for the share count there or anything but just wondering what the view around the ATM usage was as the company nears.
<unk> eligibility.
Yeah, I mean, well, yes, we.
38% to $39 million.
Sure so.
That would indicate the potential for some additional shares yes, I mean look the shelf and will be eligible to file the shelf you know and.
And the next several weeks.
Early September.
The the benefit there.
And it gives us greater optionality with respect to capital sources. It gives us the opportunity to.
Potentially put in and ATM program.
And so and and so forth. So it was more.
And you had talked about diligence on the asset side of the balance sheet, we're going to practice at the same diligence on the right side of the balance sheet.
Utilizing all of the sources that we have available to us.
Okay alright, thank you.
Thanks for that.
Thank you. Our next question comes from Katy Mcconnell with Citi. Please proceed with your question.
Hey, guys. This is parker actually on for Katy.
There is my first question just has to do with the $4 million of development that you did during the quarter that you gave out during the quarter. I was just wondering from a yield perspective, you know how that is relative to what you guys are acquiring okay.
Yeah, sure and and I do think we pick up a little bit on the development side versus.
The acquiring existing assets.
I guess and it is really just a great opportunity for us to get brand new leases with with credit tenants.
And with sometimes there's a little bit more difficult to the to go out and and source and the and the open market. Those 2 particular transactions are with investment grade profile of tenants.
And our and the kind of the low to mid 7 cap rate range going and cash cap rates.
That's the more yield and then typically what we're getting even not even on the development side and remember on the on the development side, we're not taking any lease up risk, we're only going to move forward with those transactions. If we have of lease in hand, and we're not taking any cost overrun risk as well.
Got it okay. Thanks, and then just my second question.
So a little bit about best buy I think you guys acquired now and.
A few stores this quarter.
How willing are you guys to push sort of the needle on that and continue to grow with them are you guys comfortable sort of sitting out and where you are now.
Yeah, No I mean, we certainly like best buy as the business, but I think they have been.
And making some changes as it relates to how they are thinking about their footprint within their store. So we're extraordinarily cautious with with our best buy.
Exposure and in terms of which ones were willing to add to the portfolio and.
So we're.
And we're looking at cell phone data and really trying to get the best foot traffic.
Data locations that we can get with the best buy and have conversations with best buy and see how committed they are to those locations. We just happen to have I believe it was 3 and the quarter of.
Opportunities to add to our best of my portfolio.
And quite frankly, we don't have any more and our current pipeline not to say that we wouldn't add more but I think the locations that we did add.
While we did get 3 and the quarter are somewhat rare. So I wouldn't expect to see us add much of much more of our best buy.
2 of our best buy portfolio.
Got it and and if I can.
What cap rate were you guys able to get those 3 assets at just during the quarter.
And and we don't usually give specific cap rates on individual deals.
But it was slightly higher than the average cap rate for the quarter.
Okay. Thank you.
Thank you. Our next question comes from Greg Mcginniss with Scotiabank. Please proceed with your question.
Hey, good morning.
So mark I know you mentioned.
Not passing.
Great deals with top tenants and.
I'm, just curious if theres any issues sourcing investment opportunities with new companies.
And your investment criteria, and maybe you said a bit differently, how many potential net lease tenants hit your investment criteria versus those of the business with today.
Yes sure.
It is a bit of a limited universe, because we are a very stringent on on the types of credits that were willing to add to the portfolio and the and the real estate quality.
Yeah, most of retail and quite frankly is not and vessel so.
It is a somewhat finite universe, we are constantly looking for.
More of them.
Net.
Tenants that we that we like that are maybe not investment grade and maybe investment grade profile. We've added a few of those over time and I would expect to see a couple of new tenants pop into the 2 of the portfolio over the next quarter or 2 so.
But we are seeing plenty of opportunity for us to grow with the with the tenants that are and the portfolio.
You've got exceptional relationships with most of the tenants that you see us continue to add to the portfolio, which is certainly helpful and getting insight into how they're thinking about their real estate and their growth. So we're pretty comfortable that we're going to continue to be able to add to the portfolio with very similar.
And as well as very high quality assets.
Okay. Thanks, and then another 1 on development for you and I apologize as I believe you made the comment in the opening remarks regarding Q2, 2020, 2 but I kind of missed it.
Just curious you know how much traction you're gaining on the development side and how youre thinking about the.
Longer term potential investments.
And the size you know looking forward into the next few years from the 4 million and today too.
Whenever it might be and the future.
Yeah, and not sure and and we are starting to pick up a little bit more.
We've got a lot of different ways that we acquire properties that's the.
And then a focus for us really even going back to when we were private.
Building.
And those relationships and trying to get kind of the.
The programmatic type.
The transaction is going with tenants that we like and we're starting to get more and more traction there. So I do think it'll grow, albeit on the margin.
And with what we're acquiring quarter to quarter and and quarter out and we just really like the fact that we're getting a new $10.
15 year lease.
And depending on who the tenant is.
And at a location that they are committed to and typically getting better pricing.
And so we kind of view that is of great way of kind of adding more alpha to the portfolio without taking more of a more beta so.
And would expect on the margin for that to be a bigger chunk of what we do and the future.
I appreciate that color and just a final question for me is on <unk>.
And the decision to use at least 360 million as the acquisition.
Guidance number.
Just curious why you use the at least instead of maybe a more traditional.
Net investment.
Okay and then.
Yeah, and I mean, obviously.
<unk>.
I think throughout the organization are we willing to under promise and over deliver so we wanted to make sure that we are going to going to be able to do at least $360 million. So obviously you can expect us to do a number north of the north of $360 million.
But we felt like that gave us comfort that we would not be on the calls.
Underachieving.
And depending on what the opportunity set is that comes in.
We're pretty confident that we're going be able to hit that number we really only have 60.75 days of the <unk>.
Site and to what we're actually going to be closing.
So.
It is a little bit difficult to really give a a really firm number.
Beyond at least $360 million, yeah, and Greg and if I could just add to that and I think as mark talked about and his prepared remarks.
In the remarks is as we really start.
As we've been executing and as we continue the prior yard.
<unk> of the components of the acquisitions right as I think what Youre seeing is quality is always coming first and.
11 consecutive months of 100% rent collections.
Economics relative to the quality is really a close second and then either of the timing of those comes third we're really trying to build.
Billed as bullet proof of a triple net retail portfolio as we can out there.
So from our perspective, we're very very confident and our ability.
Focusing on ABR right and.
And.
And almost somewhat less confident on the inter quarter impact of those deals because we're so focused on.
On quality and those of the types of things that kind of drive us to something that says at least $360 million as opposed to Oh, the traditional we're increasing our guidance by 10%.
Right, Okay, well, thanks, Andy appreciate that.
Thank you.
Our next question comes from keeping Kim with true. Please proceed with your question.
Thanks, Dan and good morning, So I guess going back to the acquisition questions.
Are you finding that your bullseye for the types of assets.
And the investment grade is probably not all of the same rate as probably even a range within that are you.
Your line.
Are you having to.
And to move your Bull's eye at all because of the competitive pressures or are you still finding all the deals that are typically what you what you would want to own.
Yeah, and it's a great question Kevin.
We are seeing maybe a little bit more competition.
A little bit higher expectations for.
And from some of the sellers.
But I do think that is offset with the repeat business that we're doing and really kind of sourcing more acquisitions than we did quarter quarter and a quarter out and then of laying them out and a bell curve and trying to figure out which ones are of price the.
The most of them efficiently and Thats allowed us to continue to keep.
From the types of GAAP rates.
And since we've gone public and I think you've seen some of our peers have you've seen that drop.
And quarter by quarter.
I do think that becomes more of a challenge if we want to start doing a lot more acquisitions.
If we want to really ramp the acquisitions and I do think that you might see cap rates dropped a little bit on the margin.
Keep the same but we're very focused on our sourcing channels and <unk>.
Really getting the deal first and creating our own deals or providing some type of value whether it's capital 2 of developer.
Blend and extend the type of opportunity of those those are the areas, where we feel like we can continue to get the same types of the yields that we have each quarter, but yes to your point I do think there is a lot of competition.
<unk>.
Out there because they are the very attractive.
The opportunity is very easy to finance.
But I do think overtime as we grow that may become a little bit more difficult, but I don't think we're there yet.
And that actually brings me to my second question.
And you are hitting the run rate of about $100 million of acquisitions.
And at the border.
What does it what does it take.
To go to a $150 million so.
Is it as simple as hire more people or like you mentioned.
We're trying to expand the addressable universe of what you really want to own and just how are you thinking about that as you look out you are too.
And 3.
Yes.
Yeah and.
And that's something that we talk about a lot internally. There is a couple of different ways. We can increase the $150 million, we could sacrifice quality, which I don't think were willing to do.
I think the more likely Avenue, if we were to and wanted to do a lot more and acquisitions.
In the near term I think as we lay out that bell.
All of curve of efficiently priced assets, we'd have to eat a little bit more into that bell curve and buy some assets that are a little bit more efficiently priced. So I think on the margin you would see if it was using your example of $150 million I think you'd probably see a slight difference and the overall cap rate.
Okay. Thank you.
Thank you.
Thank you. Our next question comes from Linda Tsai with Jefferies. Please proceed with your question.
Hi, and it looks like average weighted term went down a little on your acquisitions any additional color you could provide and is this something you would expect going forward.
Yeah, no and we are focused on.
Yes, keeping around 10 years weighted average lease term so.
Ben and some conversations with our current tenants.
Especially as we're looking at acquiring more assets and doing blend and extends.
Externally on the acquisition front, yes, we have started to include some of the assets that we own within the portfolio.
To potentially get some early.
Executions on locations that are that are performing very well, but yes, and I do think that's a challenge with investment grade and high quality tenants typically the lease terms are a little bit shorter than if we were out just doing sale leasebacks, where you see a lot of 20 year lease terms. So it is it is something that is the challenge, but Fortunately I guess, 1 thing I can give.
Some color on the current pipeline the.
The lease term is a little bit longer.
That is an area that we've added a little bit more focused and.
And then can you talk about how the net leased the environment has changed since you went public about a year ago acknowledging that it was and the middle of the pandemic and maybe just what you've learned along the way and.
Building and executing upon your pipeline.
Yeah sure I mean at the very beginning I think we were just starting to get started starting to come out of the pandemic a little bit and so you still had a number of buyers on the sidelines you had a lot of people kind of trying to figure out what they want the wanted to do.
But in.
And we focus that haven't been as impacted by the the first round of Covid hopefully, we're not about the pace of the second round.
But I think those really held up very well. So there is still always a pretty strong bid for the for those assets.
But I would say on the margin, we've seen a little bit more little bit more competition with the small family offices and <unk>.
Individual buyers.
But we.
We still feel like we're going to be able to execute on our strategy.
Yes.
Oh.
Good day.
If I could just add and it's just really important to note that despite.
Despite the the.
The areas from our $1.40 for a where we are and giant risk on environment to COVID-19 giant risk off and.
Back currently and we remain steadfast to our strategy and we've been able to execute.
And of feel like despite the fact that mark and I and the team of only been together for call. It 18.19 months.
The reality is we've been through a complete cycle of risk and feel really really confident of.
The the direction that we're going and our ability to continue to produce results.
Thanks, just 1 last 1 youre at 70% IGD tenancy, and then another 11% and hygiene tenancy and the rest of this more yield driven.
Do you have of long term view and with the right balances for being high quality, but also drives and yield at the same time.
Yeah sure so.
And I don't think we're going to change quarter to quarter, but we are subject to what the opportunity set is on a quarter to quarter basis, though.
We don't see a giant difference at.
And I remind versus the investment grade profile to investment grade like of Triple B minus credit versus a double b plus credit other than it has the delineate.
Delineation of the investment grade or non investment grade. So I do think you could see us do some more some double b type credits or some investment grade profile credit and.
See those percentages.
<unk> and move around a little bit on the margin but.
But I think in the past, we've stated kind of of the investment grade.
The percentage of the portfolio is likely to stay between 65, and 75% and so we're kind of like rate and the middle of that right now, but we are seeing a little bit more alpha that we feel like we can pick up with.
Really not taking any more risk on the <unk>.
And a great profile side, so we'd like to like to find some more names and add more to that particular bucket.
Thanks.
Thank you.
On the.
Thank you there are no further questions at this time I would like to turn the floor back over to Mark Manheimer for any closing.
And comments.
Yeah. Thanks, everyone. We look forward to discussing our progress and the future hopefully in person alright take care.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and have a wonderful weekend.